Coinbase has launched a new service allowing US customers to borrow up to $100,000 in USDC using Bitcoin as collateral, in partnership with Morpho, a lending protocol on Coinbase’s Base network. This initiative provides crypto holders with liquidity while retaining ownership of their assets, offering an alternative to traditional credit-based loans.
How Bitcoin-Backed Loans Work
- Instant Liquidity: Borrow USDC at competitive rates with flexible repayment terms.
- Collateral-Based: Loans require pledging Bitcoin worth equal or greater value than the borrowed amount (e.g., $100,000 in BTC for $100,000 USDC).
- Automated Risk Management: Morpho’s protocol liquidates collateral if market drops threaten loan coverage.
- Exclusions: Available across the US except New York state.
Key Features
- Coinbase Wrapped Bitcoin (cbBTC): Users’ BTC is converted to cbBTC, enabling on-chain utility while staying within Coinbase’s ecosystem.
- Seamless Integration: Morpho’s DeFi lending powers the loans via Coinbase’s user-friendly interface.
- Flexible Use Cases: Funds can finance major purchases, trading, or other needs.
The DeFi Advantage
Coinbase positions this service as a bridge between traditional finance and decentralized finance (DeFi), emphasizing transparency and accessibility. By eliminating credit checks and leveraging blockchain technology, the platform aims to democratize financial tools.
👉 Explore crypto-backed loans on Coinbase
Recent Regulatory Win
A federal judge recently ruled in favor of Coinbase against the SEC, criticizing the agency’s refusal to establish clear crypto regulations as “arbitrary and capricious.” This decision strengthens Coinbase’s stance in advocating for regulatory clarity.
FAQs
1. What collateral is required for a Coinbase crypto loan?
Borrowers must pledge Bitcoin (BTC) valued at or above the loan amount. Additional assets may be added later.
2. How does liquidation work?
If BTC’s value falls below a threshold, Morpho automatically sells collateral to repay the loan, protecting lenders.
3. Can I repay the loan early?
Yes. Loans have open-ended terms, allowing early repayment without penalties.
4. Is this service available worldwide?
Currently, it’s offered in the US (excluding New York).
👉 Learn more about DeFi lending